| Fri 10 Jun 2005, 10:48 | | BHP Billiton sees sales to China rising 36% |
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BHP Billiton sees sales to China rising 36%
Tan Hwee Ann
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Bloomberg
MELBOURNE — BHP Billiton, the world’s biggest mining company, will increase sales to China as much as 36% this year as the world’s fastest-growing major economy buys more raw materials and commodity prices rise.
Sales to China would rise to between $3,2bn and $3,3bn in the year to June 30, Tania Price, a spokeswoman for BHP Billiton said yesterday.
BHP Billiton sold $2,43bn worth of commodities to China last year. It bought WMC Resources for A$9,2bn this month, and is investing in new mines and oilfields as China’s economic growth fuels demand for commodities from nickel to natural gas.
Soaring Chinese consumption helped BHP Billiton report record first-half profit, accounting for one tenth of sales.
“China will become the place where the largest part of their business will be,” said Mark Pervan, head of research at Daiwa Securities in Melbourne.
BHP Billiton’s directors this week are holding board meetings in China for the first time. They are also meeting customers, government representatives and employees.
Price was confirming comments made by CE Charles “Chip” Goodyear and reported earlier by newspapers, including the Australian.
BHP Billiton’s share price fell 3c, or 0,2%, to A$17,12 on the Australian Stock Exchange yesterday.
“Our forward budgets already reflect investment of more than $10bn in more than 20 new projects around the world,” BHP Billiton chairman Don Argus said yesterday from Beijing.
“Much of this new supply will, I am sure, be destined for China and will bring supply and demand into closer balance.”
BHP Billiton sold $1,6bn worth of products to China in the six months to December last year. Sales of $3,2bn for the full year imply second-half revenue from China of $1,6bn, unchanged from the first-half.
Iron-ore prices rose 71,5% starting April 1, while coking coal prices rose 120%.
BHP Billliton is the world’s biggest coking coal exporter and the third-largest supplier of iron ore.
Copper prices in New York this week touched a 16-year high, rising 32% in the past year as demand soared in China, the world’s biggest consumer of the metal.
Nickel prices have gained 33%, while zinc rose 21%.
Prices may weaken in the coming years, Argus said. “As Chinese demand has grown so quickly, global supply in many materials has become short and prices have risen,” he said.
“Commodity prices should moderate over the next few years.”
BHP Billiton and rivals such as Companhia Vale do Rio Doce, Inco and Rio Tinto are increasing production to meet soaring global demand.
